Fasten your seat belts: Big auto slowdown sale is here

Some dealers, who are sitting on old stock of 2017-2018, may have to liquidate it at throwaway prices.

Highlights

The September offers are comparable to those in December

Discounts on two wheelers has probably never been witnessed in the last 20 years.

The average discount for medium and heavy trucks is now Rs 3,50,000-375,000 per vehicle

MUMBAI: Car, two-wheeler and truck makers have raised discounts to the highest levels in recent years as they look to perk up demand during the festive season and clear stock ahead of new emission norms set to kick in from April 2020.

In a market where discounts of 5-7% were seen as par for the course for this time of the year, rebates for passenger vehicles are now as high as 29% while truckmakers are further pushing up the meter to 20-25%. The September offers are comparable to those in December, when auto companies focus on liquidating stock. With block closures becoming a regular phenomenon and inventory piling up, automakers and car dealers are touting this festive season as ‘the best time to buy’.

Market leader Maruti Suzuki, usually the most conservative in the industry, is leading the wave with discounts of Rs 30,000-1.2 lakh. Entry model Alto is available at almost 18-20% lower than the sticker price while Hyundai’s Grand i10 is being offered at a 15% discount.

Shashank Srivastava, Maruti’s head of sales and marketing, said that the company is offering discounts to clear BSIV inventories and is seeing some pickup in retail sales and enquiries. “Our enquiry level has increased in the current month and retail sales in August has been better than in July; the discount schemes are likely to support the current momentum,” Srivastava said.

Maruti’s average discount in the June quarter rose Rs 1,816 per vehicle to Rs 16,941, which is 3.3% of the net realisation per car (the money the company makes from each unit). This is likely to go up and could affect second quarter profits. Maruti Suzuki has also rolled out seven models compliant with the new emission norms and is offering dealer-level discounts for these BS-VI vehicles.

Hyundai said the discounts being given in August and September are normally offered in October or December. Toyata Kirloskar is offering discounts of as much as Rs 2,50,000 on the Yaris to clear its inventory while Honda is giving discounts of Rs 42,000-4,00,000 with the highest rebate being offered on CRV.

Renault and Nissan have lowered prices of Captur and Kicks by over Rs 1.5 lakh. Industry experts say carmakers are trying to ensure that all BS-IV stock is sold off before next year’s deadline as the unsold inventory may have to be scrapped.

Some dealers, who are sitting on old stock of 2017-2018, may have to liquidate it at throwaway prices. A leading motorcycle dealer said the current level of discounting in two wheelers has probably never been witnessed in the last 20 years.

Top companies are offering discounts of Rs 1,000-1,500 on cash sales and a similar amount as interest subvention if customers buy vehicles through financing.. The discounts in the commercial vehicle segment too are quite high. The average discount for medium and heavy trucks is now Rs 3,50,000-375,000 per vehicle for leading players.